STOCKS weekly review (03. – 07.06.2013 ASIA)

Asian stocks fell for a third week, with the regional benchmark index posting its biggest weekly drop since May 2012, as the correction in Japanese shares deepened after the yen surged and speculation grew that the Federal Reserve may scale back stimulus.

The MSCI Asia Pacific Index dropped 3.3% last week to 130.37, 9.7% below this year’s high on May 20.

Japanese stocks extended losses for a third week as Prime Minister Shinzo Abe’s growth strategy failed to impress investors and as mixed economic data from the U.S. added to concerns the recovery will stall if there is a premature withdrawal of stimulus.

Japan’s Topix index slumped 6.9% last week, the biggest weekly drop since March 18, 2011 in the aftermath of record earthquake, tsunami and subsequent nuclear disaster. The Nikkei 225 Stock Average declined 6.5%. Both gauges have dropped more than 17% from their recent high on May 22, close to the 20%.

The country’s Government Pension Investment Fund, the world’s biggest manager of retirement savings with 112 trillion yen ($1.16 trillion) of assets, said after the market closed yesterday that it will reduce its holdings of local bonds and buy shares.

Australia’s S&P/ASX 200 Index decreased 3.8%, while New Zealand’s NZX 50 Index lost 1.6%. South Korea’s Kospi Index slipped 3.9%. Taiwan’s Taiex index fell 1.9%.

China’s Shanghai Composite Index dropped 3.9% last week as official and private reports on China’s factory activity offered conflicting views of the economy. A report released by HSBC Holdings Plc and Markit Economics on June 3 showed a contraction, while the official measure, released by the government on June 1 indicated expansion.

Hong Kong’s Hang Seng Index sank 3.7%, the biggest weekly drop since May 2012, after Nomura Holdings Inc. cut its rating to underweight from overweight.

Japanese exporters dropped as the yen posted its biggest weekly advance since October 2008. Mazda tumbled 16%, Toyota Motor Corp., the world’s biggest carmaker, declined 8.8% and Sony Corp. fell 9.5%.

Japanese brokerages slumped this past week amid concern the retreat in the nation’s stockmarket would crimp profits. Nomura, Japan’s biggest brokerage, sank 9.8%, Daiwa Securities Group Inc., the second-largest, fell 6.6%.

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